Background Of Efrain B. Trujillo (CRD)
Trujillo first registered with a FINRA member as a General Securities Representative in
October 1998. He later became registered in various other capacities with that FINRA
member where he was registered until October 2012. Between December 2013 until
August 2017, Trujillo was registered as a General Securities Principal and as a General
Securities Representative with Financial West Group, a former FINRA member.1 Since
August 2017 Trujillo has been registered in various capacities with another FINRA
Respondent does not have any relevant disciplinary history.
1 FINRA expelled Financial West Group from FINRA membership in February 2020 for failure to file numerous
financial reports required under FINRA’s rules.
Activity(s) Reported – Efrain B. Trujillo
This matter originated from FINRA’s 2016 cycle examination of Financial West.
NASD Rule 3010(a) and FINRA Rule 3110(a) require that each member establish and
maintain a system to supervise the activities of each associated person that is reasonably
designed to achieve compliance with the applicable securities laws and regulations, and
with NASD and FINRA Rules. FINRA Rule 2360(b)(20)(C) requires that members
provide principal supervisory review of options trading in customer option accounts,
including, but not limited to: (i) the compatibility of options transactions with investment
objectives and with the types of transactions for which the account was approved; (ii) the
size and frequency of options transactions; (iii) commission activity in the account; (iv)
profit or loss in the account; and (v) undue concentration in any options class or classes.
The requirement to supervise includes the duty to investigate red flags that suggest
misconduct may be occurring and to reasonably act upon the results of such investigation.
Trujillo’s Failure to Supervise
Between December 2013 and July 2017, Financial West designated a new Office of
Supervisory Jurisdiction (OSJ) Supervisor and OSJ Manager (collectively, OSJ
Supervisor) of the Brentwood OSJ office of Financial West. In these capacities, the OSJ
Supervisor was responsible for supervising the Brentwood registered representatives,
including four representatives who have since been barred for trading misconduct.
Financial West’s written supervisory procedures (WSPs), among other things, required
the OSJ Supervisor, to review the transactions of these four representatives to ensure the
suitability of the transactions they recommended to customers.
In December 2013, the OSJ Supervisor orally delegated to Trujillo, another principal in
the Brentwood OSJ office, certain supervisory responsibilities required by the firm’s
WSPs. Those responsibilities, later documented in writing in accordance with the WSPs,
included: reviewing customer account transactions on a daily, monthly and periodic
basis, and taking reasonable steps to ensure the representatives’ recommended
transactions were suitable. At the time of the delegation of the responsibilities to Trujillo
in December 2013, Trujillo had just passed the General Principal examination in order to
act in a principal capacity.
Between December 2013 and July 2017, when Trujillo was designated with certain
supervisory tasks for Financial West’s Brentwood OSJ office, he failed to reasonably
supervise the four representatives notwithstanding multiple red flags that should have
prompted greater scrutiny of the representatives’ trading activities by Trujillo, but did
not. Despite the red flags, Trujillo failed to further investigate the potential trading
misconduct which was suggestive of both excessive trading and qualitatively unsuitable
recommendations involving options, low-priced securities, and Non-Traditional ETPs.
In December 2013, a Financial West compliance principal specifically informed Trujillo
of red flags indicative of excessive trading in the accounts of customers assigned to two
of the four representatives. In addition, between January 2014 and November 2016, there
were additional red flags that should have prompted Trujillo to investigate specific
trading activity by the four representatives in the nine customer accounts, including:
the accounts repeatedly appearing on the Monthly Account Supervision exception
reports and reflecting high annualized turnover rates and a high number of
transactions suggestive of excessive trading;
the daily trade blotter for the representatives’ transactions, reflecting their daily
trading volume, and high daily and year-to-date commissions being charged to
in-and-out trading in the customers’ accounts;
investment objectives for the customers’ accounts that were inconsistent with the
short-term trading activity in the accounts;
inverse and/or leveraged ETF positions remaining in accounts for multiple
trading in certain customer accounts involving short-term trading in low-priced
options trading in one customer account by one representative that was
speculative and inconsistent with the customer’s investment objectives and risk
sustained losses due to the representatives’ excessive trading in all nine customer
In the face of this information indicative of violative trading practices, Trujillo acted
unreasonably by failing to further scrutinize the conduct of the four representatives.
Trujillo was aware of but failed to investigate and address specific red flags indicating
trading misconduct suggestive of excessive trading and qualitatively unsuitable
recommendations in violation of FINRA’s suitability rules, including the suitability rules
relating to options trading.
For example, in March 2016, the Financial West compliance principal notified Trujillo of
red flags suggesting that an unsuitable double-leveraged ETF position was being held in a
customer’s account for multiple trading sessions (for an account with investment
objectives that included capital appreciation, income, and capital preservation). Trujillo,
however, acted unreasonably by failing to investigate and curtail the misconduct. As a
result, the customer’s account held this unsuitable double-leveraged ETF position for
over 520 days, from February 2016 until July 2017.
For the above reasons, Trujillo failed to reasonably supervise the trading activities of the
four representatives in the Brentwood OSJ office, by ignoring and not reasonably
responding to numerous red flags suggestive of excessive trading and qualitatively
Therefore, Trujillo violated NASD Rule 3010(a), and FINRA Rules 3110(a),
2360(b)(20), and 2010.
Penalties And Sanctions
A bar from associating with any FINRA member in any principal capacity; and
A $20,000 fine.
Respondent agrees to pay the monetary sanctions upon notice that this AWC has been
accepted and that such payments are due and payable. Respondent has submitted an
Election of Payment form showing the method by which he proposes to pay the fine
Respondent specifically and voluntarily waives any right to claim an inability to pay, now
or at any time hereafter, the monetary sanctions imposed in this matter.
Respondent understands that if he is barred or suspended from associating with any
FINRA member in a principal capacity, he becomes subject to a statutory disqualification
as that term is defined in Article III, Section 4 of FINRA’s By-Laws, incorporating
Section 3(a)(39) of the Securities Exchange Act of 1934. Accordingly, Respondent may
not be associated with any FINRA member in a principal capacity, during the period of
the bar or suspension. See FINRA Rules 8310 and 8311. Furthermore, because
Respondent is subject to a statutory disqualification during the principal bar, if he
remains associated with a Member Firm in a non-barred capacity, an application to
continue that association may be required.
The sanctions imposed herein shall be effective on a date set by FINRA staff. A bar or
expulsion shall become effective upon approval or acceptance of this AWC.
Recent Activity(s)Of The Individual/Firm
Between December 2013 and July 2017, while registered with Financial West, Trujillo
failed to supervise four former Financial West registered representatives, who
excessively traded and recommended qualitatively unsuitable trades involving options,
low-priced securities, and Non-Traditional Exchange Traded Products (ETPs)2
accounts belonging to five customers. Trujillo failed to investigate red flags indicative of
trading misconduct and take appropriate action in a manner reasonably designed to
ensure that the representatives acted in compliance with FINRA rules. As a result,
Trujillo violated NASD Rule 3010(a), and FINRA Rules 3110(a), 2360(b)(20), and
2 Non-Traditional ETPs include leveraged and/or inverse leveraged Exchange Trade Funds and Exchange Traded
3 NASD Rule 3010 was effective for conduct prior December 1, 2014. FINRA Rule 3110 superseded NASD Rule
3010 on December 31, 2014.
How To Spot A Fraud Finance Advisor (Infographic)
Help For Victims Of Efrain B. Trujillo
If you have lost funds because of misrepresentation, unsuitable investment, or unsuitable investment strategy from Efrain B. Trujillo. Then you can take legal action and get justice. Fraud, Malpractice & dereliction of duty should not be taken lightly, especially in this industry. We highly suggest that you notify authorities or seek legal action if your financial advisor or brokerage firm fails to abide by FINRA’s rules are regulations.
Similar Review: Trade Principal
Financial advisors are regulatory & legally obligated to suggest (recommend) the most suitable investments/investment strategies to their clients. Their suggestions should have their client’s best interests and should be appropriate for their client’s goals and needs. Similarly, the brokerage firm which hires financial advisors also has a regulatory & legal obligation to keep a close watch and supervise their Financial Advisors’ practices & behavior. They need to make sure that the financial advisor is not being manipulative or having an unreasonable bias towards certain investments. If the financial advisor and/or the brokerage firm breaches these duties, then the client/customer may be entitled to a full or partial recovery of their losses.
Financial advisors need to have the interest of their clients when giving suggestions related to investments and investment strategies. Reasonable basis suitability requires the advisor to do their best to analyze & identify the risks and rewards associated with their suggested investment and/or investment strategy.
Efrain B. Trujillo has been involved in fraudulent activities and is an unsafe professional entity. We strongly recommend you avoid any association with such a shady figure.
- Shady Activity
- Swindling Activity Reported By Clients
- Under Govt. Organization's Radar
- High Risk of Fraud